* Crain’s ran an interesting story over the weekend about how House Speaker Madigan’s refusal to allow McPier to refinance bonds cost the authority half a billion dollars.
Several motives were offered. For instance, Madigan was at war with Rod Blagojevich…
But in response to questions from Crain’s, a spokesman for Mr. Madigan now says the speaker blocked refinancing to prevent the Blagojevich administration from cashing in on contracts for bond work, such as underwriting and legal services. He provided Crain’s an unsigned memorandum of understanding, dated August 2007, in which McPier agreed to allow the state to review and approve all fees and “structuring decisions” related to bond refinancing.
Asked about the financial impact of delayed refinancing, the spokesman says the “consequences were outweighed by (opposition to) becoming part of the Blagojevich fundraising machine.”
The war against Blagojevich was also a war against Blagojevich’s guy at McPier, Juan Ochoa…
“It was no secret that Madigan had a beef with Ochoa and wanted him gone,” says state Rep. Angelo “Skip” Saviano, an Elmwood Park Republican who sponsored refinancing bills in 2005, 2007 and 2009. “As long as Ochoa was there, Madigan wasn’t going to give McCormick Place anything.”
Madigan was taking out revenge when one of his guys was fired…
The guy was Jack Johnson, who had worked as a legislative analyst on Mr. Madigan’s staff in the mid-1980s before signing on as McPier’s chief of external relations in 1989. In September 2007, Mr. Ochoa, just eight months on the job, fired him.
Or, Madigan was fronting for some clients…
By holding up refinancing, the speaker also denied McCormick Place the money to build a new hotel. That bought time for clout-heavy developers Gerald Fogelson and Cleveland-based Forest City Enterprises Inc. to push a controversial land swap and hotel deal with McCormick Place on property just north of the convention center. Both were then clients of Mr. Madigan’s law firm, Madigan & Getzendanner, but the speaker denies any connection. […]
The internal documents show McPier officials enthusiastically supporting the project, with the notable exception of Messrs. Ochoa and [McPier Chairman John Gates].
* And here’s how it ended up…
As the recession raged in early 2010, the collapse of the real estate market scuttled the deal. That May, after Mr. Ochoa resigned, the General Assembly finally passed legislation that lowered McCormick Place’s debt payments, allocated funds to expand the existing Hyatt Regency McCormick Place and imposed wage restrictions and new work rules on union labor. The House sponsor was Speaker Michael Madigan.
The legislation reduced this year’s debt service by $96 million, but the damage had already been done at the Metropolitan Pier and Exposition Authority, known as McPier, the agency that runs McCormick Place. Denied refinancing for six years, McPier paid out as much as $300 million more in bond interest than it should have and was forced to tap state sales tax revenue to meet its obligations.
Mr. Madigan’s inaction also set off a chain of events that put Chicago’s $8-billion trade show industry — and the estimated 66,000 jobs it supports — at risk. Without revenues from the debt savings and a second hotel, McPier had to mark up its prices in the middle of the recession, driving away two trade shows. With McCormick Place in crisis in late 2009, other shows threatened to leave Chicago unless state lawmakers imposed restrictions on McPier unions.
Go read the whole thing.
- CircularFiringSquad - Monday, Nov 14, 11 @ 6:47 am:
Interesting revision of history ….The Blagoof’s align with “Billboards” Cross hit men to pour out some slop. What a team.
Too bad they are trying to defend Blagoof fundraising schemes. Yikes does that look bad.
What’s next? Cellini was really a Chicago Democrat.
- phocion - Monday, Nov 14, 11 @ 6:53 am:
More than the nebulous charges against Madigan for being “too powerful,” this story has the potential to do serious damage to the Speaker and his empire. The public bought the narrative that Blagojevich alone was responsible for the waste and lost opportunities during his 03-09 reign.
The McPier article enlarges the narrative to demonstrate that the Speaker’s petty use of power cost Illinois money and jobs in a big, big way. Kudos to Crain’s for shedding light on some of the real costs of Madigan’s power. Shame upon the Speakers’ team for not speaking truth to that power.
- Aldyth - Monday, Nov 14, 11 @ 7:30 am:
Does anyone in Springfield ever ask themselves this question and then base their actions on doing the right thing?
“Would this be good for the people of Illinois?”
- Nieva - Monday, Nov 14, 11 @ 7:35 am:
He only does whats best for us…
- Happy Returns - Monday, Nov 14, 11 @ 7:38 am:
Aldyth - Yeah, they do, when they find time between filing TPS reports and reporting to 8 different managers….
- wordslinger - Monday, Nov 14, 11 @ 8:46 am:
All of thise could be avoided if such bond issues were simply competitively bid among qualified underwriters, advisors, counsel, the works.
There’s no heavy lifting in a McCormick Place refinancing. It’s all boiler-plate and the market scoops it up in a minute. There’s no need for wired up politicians to handpick firms. That’s just trolling for dollars.
- Fair Share - Monday, Nov 14, 11 @ 8:59 am:
And does anyone know where Jack Johnson landed? I bet in another cushing public sector job or perhaps a taxpayer subsidized organization.
- Springfield Skeptic - Monday, Nov 14, 11 @ 9:20 am:
Not to be cynical (well, maybe) but it sounds like a real good reason to never give a Chicago Democrat too much power. Actually, you could probably say the same thing about a downstate Republican. Conundrum.
- Anonymous - Monday, Nov 14, 11 @ 9:48 am:
$300 million? That’s 30% of a billion dollar pension payment. Will the Speaker pony up? Funny the things he thinks Illinois can and cannot afford.
- Yellow Dog Democrat - Monday, Nov 14, 11 @ 9:58 am:
Make no mistake about it, Jack Johnson was great at his job, and the ONLY reason he was fired was because Blagojevich was trying to push every lever to strong arm the General Assembly.
Hindsight may be 20/20, but that has not relieved some folks of their tunnel vision.
What was at stake for nearly a decade in Illinois was an attempt by one corrupt governor and his legions of enablers to subjugate the legislative branch, judiciary, and the constitution to serve his own personal financial interests.
Dont get me wrong, Madigan is a partisan, and he’ll do almost anything WITHIN the letter of the law to maintain a Democratic Majority in the House. But he also has reverence for our Constitution and understands his place in history to maintain the dignity and pre-eminence of the Legislative body.
That fight might have ended sooner and been less bloody if our beloved Free Press had done a better job of focusing on what was really at stake instead of framing the story as mere political jockeying. Apparently, some STILL dont get it.
- Yellow Dog Democrat - Monday, Nov 14, 11 @ 10:13 am:
The best historic comparison I can make is when Congressional Democrats, including the Vice President of the United States presiding over the US Senate, blocked efforts by FDR to pack the US Supreme Court after conservative justices blocked much of the New Deal
No one in their right mind can argue that was about political infighting, and even those who supported the New
Deal could see that something much bigger was at stake.
- Fair Share - Monday, Nov 14, 11 @ 10:20 am:
Yellow Dog. If Jack Johnson was so “great at his job”, why didn’t he get the refinancing done in 2005, when it was first attempted?
- Original Rambler - Monday, Nov 14, 11 @ 10:41 am:
YDD - It doesn’t matter how “great” Johnson was at his job. Ochoa should get to pick someone he is comfortable working with in his high level jobs.
- ILPundit - Monday, Nov 14, 11 @ 10:48 am:
YDD — I usually like your insights. But….are you kidding me?
The stakes in the battle between Madigan and Blagojevich had nothing to do with constitutional limits of power and everything to do with which of these two powerful Democrats were going to be the top dog in a new era where Democrats actually controlled the Executive Branch.
Madigan won the battle, clearly. But he wasn’t fighting for the constitution, he was fighting to hold onto his base of power at all costs. It’s not nearly as romantic, but them’s the facts.
- Yellow Dog Democrat - Monday, Nov 14, 11 @ 10:54 am:
Rambler - This wasnt about Ochoa getting to pick someone he was comfy with. Make no mistake, Johnson was let go under orders from Rod to send a message to The Speaker. And Fair Share, if you think that Johnson was responsible for the logjam in Springfield, you are delusional. I don’t think Johnson was ever delusional enough to believe he had that much power, influence or responsibility.
Do you think Johnson’s the guy who suggested that they add a line to Rod’s speech accusing the legislature of spending like drunken sailors?
No. Rod was a power hungry meglomaniac, and he surrounded himself largely with syncophants while systematically ignoring the advice of anyone who even hinted he wasnt the all-powerful center of Illinois and destined for the White House.
- langhorne - Monday, Nov 14, 11 @ 11:02 am:
i worked on a bond refinancing issue for the state in the 80s. the first mtg w the underwriters looked like an alumni mtg of former administration officials and dept directors. it scared my boss so badly, he didnt attend another mtg.
- Outraged - Monday, Nov 14, 11 @ 11:10 am:
If Madigan had legitimate concerns about Blago hijacking the process, maybe he should have called the state’s Attorney General and expressed them.
- Monday -- again - Monday, Nov 14, 11 @ 11:38 am:
Uh?
“Madigan is a partisan, and he’ll do almost anything WITHIN the letter of the law to maintain a Democratic Majority in the House.”
What party exactly is he partisan for - because his actions and values sure don’t align with my party. Madigan is more concerned about Madigan having power than the Dems having power.
The only way Illinois will move on - and I think many people believe it’s time to have a different leader, one man in power too long can be troublesome - is to have the Trib or Sun-Times ask new candidates if they support Madigan for Speaker. Those that say yes, get no endorsement. Simple. There are other Dem leaders who can step in and be effective - without the pettiness.
Madigan’s district will never vote him out - it’s up to the members to finally do something to move this state forward.
- Fed up - Monday, Nov 14, 11 @ 11:43 am:
Madigan has been anointed king and the gerrymandered maps will keep the Dems in control of both houses for the next ten years. The GOP had better have an actual plan for the next gov race because they will be irrelevant very soon. Then the whole state can be as well run as Chicago and cook co.
- Yellow Dog Democrat - Monday, Nov 14, 11 @ 11:49 am:
@IL Pundit - You read to many newspapers and editorials written by people who have no actual insight or understanding. So they wrote the narrative that was handed to them by Rod Blagojevich: “Mike Madigan is the bad old king, I am the new Prince come to set things right.”
I’ll never forget when Madigan was elected chairman of the Democratic Party and Bill Black congratulated him on the floor for becoming “the most powerful Democrat in Illinois.”
Madigan relinquished the gavel and the podium, took his seat on the floor, and after being recognized by the chair thanked Black for his praise, correcting him on only one point:
“I believe Mayor Daley is the most powerful Democrat in Illinois.”
I’m sure there was a time in his younger days when Madigan did fret about the accolades, prestige and trappings of power. But his place in the history books as the longest serving leader in our state - and i believe the country - has long since been secured.
Pundits and historians will probably long debate the secret of madigans success and whether our State benefitted on whole or not.
But i find it hard for any reasonable person to argue that we’d be better off if Madigan hadnt been willing - the only person willing, really - to stand up to Blagojevich or if Tom Cross were Speaker.
- Easy - Monday, Nov 14, 11 @ 12:01 pm:
Was Madigan standing up to Blagojevich when he co-chaired his campaign for re-election? That doesn’t sound like stopping a runaway freight train of graft to me.
- phocion - Monday, Nov 14, 11 @ 12:28 pm:
YDD,
You’re kidding, right? No one is arguing that Blago was horrendous. But for Madigan to flush away money and opportunities to fight Blagojevich is inexcusable. The ends do not justify the means.
- Yellow Dog Democrat - Monday, Nov 14, 11 @ 12:33 pm:
@Monday - I believe the Tribune editorial board has been asking that question for some time.
But a paper that enthusiastically endorsed Daley time after time, benefits from millions in taxpayer subsidies, and hands out millions in executive bonuses amidst bankruptcy….well, surely you can see the credibility gap, right?
I mean, this is the paper that criticized Madigan for standing up to Blagojevich.
As for Madigan not standing up for “your party,” let me be clear: I have often disagreed with Madigan on policy and even at times on political strategy.
But once you recognize as he does that he is not omnipotent, you stop blaming him for recruiting and electing pro-life Democrats in districts where 2/3 of the voters are pro-life.
At the same time, it was Madigan who first championed legislation requiring police to videotape interrogations and Madigan and House Democrats who first advanced legislation to address racial profiling in Illinois, not Barack Obama.
Leaders lead, but with a very short rein. And you can lead a horse to water, but you cant make a horse walk on water.
I look forward to Rich’s biography, which will surpass Royko’s Boss, and hope that when the day does come that Madigan can lay down his mantle easily and enjoy the days he is granted with his wife, children and grandchildren.
- Statesman - Monday, Nov 14, 11 @ 1:05 pm:
Juan Ochoa. Wasn’t that the guy that Gubernatorial Candidate Brady selected to raise funds for his campaign in the Latino community? Things that make you go hmmm.
- Yellow Dog Democrat - Monday, Nov 14, 11 @ 1:51 pm:
Phocion - When the end is stopping a criminal enterprise bent on trampling the Illinois Constitution, very few of us are qualified to sit in judgement of Madigan. We should certainly take a long look in the mirror first: its not as if Greg Hinz is sitting atop a mountain of columns ctiticizing Blagojevich and applauding Madigan for standing up to him. Or even one such piece that i can recall.
For my part, i wish i had done more to help Paul Vallas in 2002.
- downstate hack - Monday, Nov 14, 11 @ 2:22 pm:
“If Madigan had legitimate concerns about Blago hijacking the process, maybe he should have called the state’s Attorney General and expressed them.”
Couldn’t agree more. Then the financing could have gone forward and saved the tax payers $500,000.
The same could be argued why are we not doing short term borrowing now to pay off the State’s obligation to vendors. Both parties at fault on that one, but the true cost again to the tax payers.
- Yellow Dog Democrat - Monday, Nov 14, 11 @ 4:00 pm:
@downstate hack - considering that EVERY criticism that Madigan ever made of Blago was cast as politically motivated, what would have been the point?
If, on the otherhand, Madigan had proof or firsthand knowledge of criminal activity by Rod, that would have been
Different, and worth referring to prosecutors. Given their very limited interaction, that seems unlikely.
- Rod - Monday, Nov 14, 11 @ 4:26 pm:
The entire Crains story is built around Rep Sacia, Rep Saviano’s, and Rep Raoul’s failed bills to refinance McPier at lower rates than what ultimately happened. While it was absurd for Rep Currie to agrue that it was unknown why their bills were killed in the rules committee, there is no evidence that the Speaker killed these bills for personal profit. There is possible evidence that it was done for political reasons in contrivance of the best interests of McPier. But wouldn’t we have all been better off if in 1967 when McCormick Place burnt down the General Assembly and the State of Illinois never got involved in the first place. We have Governor Kerner to thank for that I believe.
It is also impossible based on what appears in the article to even show that Gerald Fogelson the developer who was involved in the swap proposal and the Speaker were in cahoots somehow. What the author of the article, James Yliesela, does is to insinuate that there is unethical behavior on part of the Speaker. As for Phocion’s comment “More than the nebulous charges against Madigan for being too powerful, this story has the potential to do serious damage to the Speaker and his empire,” I simply don’t see this article adding up to much damage for the Speaker. I think we all knew Madigan & Getzendanner represented developers and they represented many important developers in Chicago. This story just confirms what is already known by those of us reading this blog and the Speaker remains omnipotent.
- MOON - Monday, Nov 14, 11 @ 4:29 pm:
Yellow Dog you are 100% correct. Keep up the good work.
- bored now - Monday, Nov 14, 11 @ 4:56 pm:
ya got to admire ydd’s loyalty. but i don’t think there is anything secret to madigan’s success. he was there when the (new) rules were written, and then made himself critical to when the (new) rules were written there after. it’s probably no coincidence that he opposed the calling of future constitutional conventions, but there is no need to speculate on that.
the other secret was that madigan made sure he had control of the money. understanding the rules and getting in the middle of the flow of money aren’t really secrets but smart politics. the guy is a brilliant tactician.
i’m just not that comfortable with politicians that build political organizations that resemble mob families rather than normal partisan institutions that are found elsewhere…
- Yellow Dog Democrat - Monday, Nov 14, 11 @ 5:46 pm:
Thanks, MOON.
@bored now -
Madigan was outspent by House Republicans but it didn’t matter.
Blagojevich raised and spent 5 to 10 times what Madigan did, but it didn’t matter.
And unless I’m mistaken, it was a coalition of business AND labor that killed the last push for a Constitutional Convention, not Madigan.
As for Madigan having “written the Rules” back in 1971…I’m no Constitutional scholar, so I can’t say how prominent a role he played in the Constitutional Convention. We’d probably have to ask Barbara Flynn Currie because I’m not sure there’s too many other Constitutional delegates left.
But I can tell you this: everyone’s been operating under the same rules for the past four decades, but only Madigan has been Speaker for nearly three of them.
Frankly, given a choice between resembling a “mob family” and the “normal partisan institutions” found elsewhere, its easy to make the case for the Mob Family Model.
Most people would agree that most Partisan Institutions are completely screwed up…like watching passengers on the Titanic fight over who is in charge of re-arranging the deck chairs.
Unless there is a statewide Democratic Party that you think has amassed a better track record over the past 12 years? From what I recall, pretty much everyone but Illinois got shellacked in 2010.
If you read Jim Collins’ “Good to Great”, I think you’ll agree that Madigan’s operation more closely represents the model of Greatness than nearly any other political organization you can name.
As for “loyalist,” look: I’ve disagreed with Madigan plenty. But I have yet to hear anyone make a reasonable argument that we’d be better off with Tom Cross or Jay Hoffman — the only names surfaced in recent years — as Speaker.
Nor is there a long list of qualified candidates lining up to be Chairman of the Democratic Party of Illinois.
Does that mean I disagree with you that the Democratic Party should be more aggressive in attracting younger voters, should embrace new media, should spend more resources on party-building and candidate recruitment activities?
No, of course not.
On the other hand, have I seen far too many candidates spend all of their time on Facebook and none knocking on doors, or all of their time complaining about how hard it is to raise money instead of calling people they know and asking them for a contribution?
Yes, and I’m betting you have too.
- Yellow Dog Democrat - Monday, Nov 14, 11 @ 6:32 pm:
And the irony of House Republicans championing debt restructuring shouldn’t be lost on anyone.
- 42nd Ward - Monday, Nov 14, 11 @ 6:33 pm:
YDD, is the opening act of “We Can’t Survive Without Mike Madigan” for the 2012 campaign?
That slogan may very well be true for you, but not for us. We and Illinois will do just fine with him out as Speaker. Given his tenure and power, he more than any single person must answer for the current fiscal disaster.
- State of ILL - Tuesday, Nov 15, 11 @ 12:42 am:
Madigan would shamefully sacrifice the entire State of Illinois to assuage his ego and lust for power - and has. Shame on him! He has to go!
- Joe - Tuesday, Nov 15, 11 @ 8:23 am:
I didn’t like that the article seemed to rely on obvious foes for comment. I also thought the photo made Madigan look too young. Interesting read though.
- wordslinger - Tuesday, Nov 15, 11 @ 8:53 am:
Refinancing should have been a no-brainer. And it would have been, if Ochoa, Blago and Saviano hadn’t been in the mix.
Seriously, is it the Crains contention that allowing those guys to quarterback a $3 billion refinancing is somehow good government? Picking underwriters, bond counsel, financial advisors — “I can smell the meat-a-cooking.”
Another absurdity:
–By holding up refinancing, the speaker also denied McCormick Place the money to build a new hotel. –
McCormick Place should not be in the business of building publicly financed hotels. The reason for McCormick Place’s existence is to fill the privately financed hotels and restaurants that collect the taxes and keep the place going. Not to compete with them.
A final absurdity, regarding Rep. Saviano’s motivation for carrying the ball for Blago on refinancing:
–Mr. Saviano, whose district includes the Rosemont Convention Center, sponsored the 2005 legislation in the Illinois House. He is unabashed about his motivations: “If we keep McCormick Place healthy, the trickle-down helps Rosemont,”–
The old trickle-down theory. Hilarious. Is the thought that if Mac Place is sold out, business moves to Rosemont? What BS. If Mac Place is unavailable, shows go to Las Vegas and Orlando, the only venues who can match Mac Place. They don’t go to Rosemont.
There’s something trickling on my shoes, and it ain’t rain.
The fact is, those guys wanted to whack up the juice from refinancing, and it would have been a huge payday, on par with the $800 Large that Big Bob K got on his “finders fee” for Blago on the pension bonds.
Refinancing was the reasonable thing to do if Blago wasn’t governor. But he was. It’s lousy that we don’t have always have reasonable, honest government in Illinois. But the fact is, we elected those guys.
- wehave issues - Tuesday, Nov 15, 11 @ 9:11 am:
==(that) we’d be better off with Tom Cross or Jay Hoffman== YDD
or Lee Daniels. Oh, wait, he was Speaky. Did so well, he was shown the door by the voters two years later…then was under investigation for improper use of state resources for political purposes.
Then one of his (many) chiefs of staff was convicted of said malfesance if I’m not mistaken.
Where is Tristano these days?
- walkinfool - Tuesday, Nov 15, 11 @ 9:26 am:
As a former CEO, and corporate consultant, I would hire MJM as a Chief Operating Officer in the private sector any day. He’s simply brilliant, forward-looking, a good judge of character, and earns loyalty.
However, the formal intertwining of his role in herding the cats in the House, and his role as chief of the state Dem Party, raises too many conflicting goals and objectives, and too many public perception issues. We ought to have separated those roles, and let MJM be as naturally powerful within his party as any Speaker, without running it or its funding.
As to his basic honesty and desire to responsibly serve the people of Illinois, my gut after watching him closely, is that he passes the character test, even though I have disagreed with him on many issues and tactics.